Abstract:
This research study focuses on examining the relationship of family and nonfamily firms
with financial leverage and financial performance of firm. Also this study aims at
analyzing the relationship between financial leverage and firm performance. The study
separates both family and nonfamily ownership in Pakistan corporate sector in order to
provide a better picture for companies to continue growth in uncertain economic
conditions.
The population of the study contain Pakistan industrial sector and 12 years’ data from
1999 to 2010 of 120companies from textile, chemical, cement and sugar sectors of
Pakistan corporate has been gathered for the analysis purpose. The data was analyzed
used regression analysis.
This study shows that nonfamily can increase financial performance in Pakistani firms.
Active nonfamily ownership, in which a person, a family or a group of companies does
not hold more than 30% share or family members does not at least one of the top two
officer positions, improves profitability where the firms where these conditions are
applied have decreases in their financial performance. Similarly, nonfamily ownership
has a positive relationship with financial leverage and financial leverage has a negative
relationship with financial performance.
